Audio 6:31
Police should have been called on RBA scandal: Stevens

Stephen LongUpdated
Mon Oct 08 21:38:00 EST 2012

The former Reserve Bank deputy governor Ric Battellino today denied warning off a whistle blower who exposed bribery and corruption at the RBA's note-printing companies at a special parliamentary inquiry. Grilled by members of the committee about why he didn't call in the Federal Police when the allegations were first raised, the bank's chairman Glenn Stevens conceded that 'older, wiser and scarred', he would now notify the police of any similar allegations.

Transcript

ASHLEY HALL: First today to the corruption scandal is engulfing the Reserve Bank. The former Reserve Bank deputy governor Ric Battellino today denied warning off a whistle blower who exposed bribery and corruption at the RBA's note printing companies.

Mr Battellino was speaking at a special hearing of the House of Representatives' Economics Committee convened to deal with the allegations of a high-level cover up at the RBA.

Grilled by members of the committee about why he didn't call in the Federal Police when the allegations were first raised, the bank's chairman Glenn Stevens conceded that 'older, wiser and scarred', he would now notify the police of any similar allegations.

Economics correspondent Stephen Long joins me now. And Stephen, tell us more first off about this allegation that the whistle blower was called off.

STEPHEN LONG: Ashley, the whistle blower is the former company secretary at the wholly owned RBA subsidiary Note Printing Australia. His name is Brian Hood and he set out to the board of Note Printing Australia allegations that agents engaged by the company were bribing foreign officials and in one case a Malaysian politician.

He also at request of Ric Battellino, the former deputy governor, attended a meeting with Mr Battellino told him of his concerns and showed him a memo formally setting out his concerns.

Now at a former hearing of a different parliamentary committee this former manager at Note Printing Australia gave sworn evidence that at his farewell Mr Battellino told him not to publicly raise his concerns about corruption allegations. He said that, and I understand he also gave the same evidence to police about Ric Battellino, Ric Battellino said today categorically it was not true, the conversation didn't not take place.

So we're left to ask who do we believe this whistle blower who was praised by the RBA as a man of integrity blowing the whistle on corruption, or the former deputy governor?

ASHLEY HALL: The concern in this whole issue has been why didn't the RBA call in the Federal Police when it first heard the corruption allegations. Did more on that emerge today?

STEPHEN LONG: The Reserve Bank stuck to its line that it put in place a process and it called in external lawyers, conducted an audit and Ric Battellino added more saying he escalated it, an audit committee - the Reserve Bank's own audit committee - looked at the allegations and recommended scaling back the use of these agents because of the bribery concerns.

He says he took it further and he actually said don't use agents and that became the recommendation of the audit committee which he sits on and that is what happened. But there basic line was we called in Freehills a top-flight law firm and they told us there was nothing wrong that there was no breech of Australian law.

Now that was questioned today at the hearing with one of the MPs on the committee, the Greens' Adam Bandt saying that that wasn't the conclusion of the Freehills report and it was - actually if you read it somewhat more ambiguous as to whether there was corrupt conduct.

Here's a taste of Adam Bandt's questioning.

ADAM BANDT: The only basis that Freehills says to the board that this payment might be legitimate is that we don't know effectively they say it's equally possible that it was paid to a creditor or even a relative that third-party payment. And on that basis that they say well we can't know one way or the other and we haven't seen any evidence that is taken as conclusive proof that there's been no wrongdoing?

RIC BATTELLINO: The fact is no payment was made on that request. The request was refused.

ADAM BANDT: Yes what I'm suggesting is what they came back with to the board wasn't a clean bill of health, it wasn't a positive statement that there'd been no wrongdoing it was in essence speculation about the legitimacy of this individual in question and why certain things might or might not have happened and simply a bald statement that they hadn't seen any evidence of wrongdoing when we know that they didn't even in fact interview the agent in question and they wouldn't have had access to their bank accounts.

RIC BATTELLINO: I can only repeat what the process was. Credible legal practitioners were asked for their views on the allegations that had been made and carried out an investigation on the information that was available to them.

ASHLEY HALL: That's the Greens Member Adam Bandt. So do you think there Stephen that this hearing answers the concerns about the RBA's conduct?

STEPHEN LONG: In some ways Ashley it actually raises more questions than answering concerns. One being the RBA's own audit committee looked at Note Printing Australia and another company that the RBA has a 50 per cent share in, Securency, now it was highly critical of Note Printing Australia but it gave Securency a clean bill of health.

Now subsequently it has been shown that there was corrupt behaviour at Securency and they were using the same agent and they had common board members. Why was it the case that the RBA's audit committee asked so few questions and gave it a clean bill of health?

Now it won't change anyone's mind as to whether the Reserve Bank did the right thing or not in not calling in the Federal Police but perhaps Glenn Stevens with the wisdom of hindsight is having some regrets. He said he might do things differently.

GLENN STEVENS: Older and more scarred and wiser now, I think it might be prudent to still do that whole process but to at the end say to the police we've done this, this is our conclusion and we're not proposing further action but we're advising you, just in case something comes up one day or in case they've got any other suggestions to do.

I think to be honest no one advised us to do that at the time but if I think, if I review this in my own mind and think and contemplate whether we might ever see a, you know some parallel sort of circumstances I think that additional step would be prudent.